Ok Tedi mine posts K1.2 billion profit

By MALUM NALU
 

Ok Tedi Mining Ltd, now 100% owned by the people of PNG through the PNG Sustainable Development Program (63.4%) and PNG government (36.6%), made a net profit of K1.2 billion in 2011 from total sales revenue of K4.5 billion, The National reports.

This was a drop from the 2010 profit of K2 billion from sales revenue of K5 billion, managing director and chief executive officer Nigel Parker announced at yesterday’s PNGSDP annual report meeting at the Crowne Plaza in Port Moresby.

Parker…OTML now 100% PNG-owned.-Nationalpic by MALUM NALU

He said dividends totaling K1.65 billion were paid out to: PNG government (K141 million), Mineral Resources Ok Tedi (K23.6 million, equity representing Fly River provincial government), Mineral Resources Star Mountains (K23.6 million, landowners)  community mine continuation agreement villages (K47.2 million), non CMCA villages (K47.2 million), Inmet Mining (K877 million), and PNGSDP (K490.4 million).

The PNG government holds the people’s investment in OTML as direct account to the nation via Treasury (18.3%), Fly River provincial government (3.05%), landowners (3.05%), CMCA region (6.1%), and non-CMCA region (6.1%).

The PNGSDP holds 63.4% for the people of PNG.

Parker said OTML was now in a strong financial position with a strong balance sheet positioned for the future, no financial borrowings, no lease commitments, a small specific hedge programme, and shareholders’ funds totaling K2.4 billion.

“2011 was a difficult operating year due to failure of the pyrite concentrate pipeline that closed production down for four weeks, one week for a fatality in the mill and other plant reliability issues,” he told the meeting.

“Copper and gold prices remained strong in 2011, but Kina expenditures were impacted by the weak US Dollar.

“The cash operating cost were well within reasonable limits of the 2011 budget.”

Parker stressed that all Papua New Guineans should be proud because OTML was now 100% PNG-owned.

“OTML is now a PNG national asset arguably worth US$ 3 billion-plus on a commercial basis,” he said.

 “However, if valued from the perspective of the total cash return to the state, the value is far more substantial.”

Parker said 2011 heralded the beginning of a new era, as at the exit of BHP, the mine was expected to close in 2010.

“Subsequent years have seen significant growth in revenues driven by consistent concentrate production and metal prices,” he said,

“In January 2011, OTML bought back the Inmet Mining Corporation’s 18% shareholding for US$ 335 million and those shares were cancelled.

“The surviving shareholders equity increased proportionately as result of the cancellation of the Inmet shares: PNGSDP 63.40%, and the People of PNG 36.60% 

“The current mine life has been reassessed and is expected to close during 2015.”

InterOil's PNG plans on the ropes

InterOil's latest talks with the government of Papua New Guinea have begun to break down and it is looking more and more likely that the deal will fall through altogether.

 Minister for Petroleum and Energy William Duma has set a 180-day trigger for termination of their 2009 project agreement, in which InterOil is set to deliver between 7.6 million-10.2 million metric tonness of liquid natural gas per year from its Elk and Antelope gas reserves.

In 2009, the government and InterOil reached this agreement, and the company promised to use state-of-the-art technology and internationally-recognised operators with experience in similar-sized assets.

However, progress has been very slow, with the company only proposing a phased development of the reserves and no yet naming an operator.

ExxonMobil has been constructing a $15.7 billion physical and liquid natural gas plant, as part of PNG’s foundation project.

Duma said that the government had worked with InterOil to ensure that the Elk/Antelope assets were monetised in a manner consistent with these high standards.

 "InterOil has for too long insisted on a development structure, which is designed to only meet its objectives of controlling the asset and the pace of developing it.

“This has led to a proposal calling for a piecemeal, incremental and fractured development implementation operated by InterOil and its affiliates, rather than by large-scale international operators with experience and capital."

Minister Duma further called for InterOil to sell it at a minimum 50.5% stake in the Elk/Antelope reserves to a major company with experience operating a plant of this size.

He added that the upstream activities, which InterOil wanted to control under its plans, must be operated by the international company, not by InterOil or its affiliates.

The company's affiliate in the region, Liquid Niugini, recently wrote a letter to the Department of Petroleum and Energy, which claimed that the government's notice of intent to terminate the project agreement was invalid.

 The company claimed that, for the state to terminate the agreement, the state must prove that the company had failed to take certain steps, whereas it was currently just upset with intentions to take future actions.

Earlier this week, InterOil claimed to be in talks with Chevron to fulfill this operator role, although Chevron had yet to make a formal statement on the matter.

 Duma and the government has consistently hinted that they would like Shell to be the international operator.

Daru to get new water and sewerage system

By MALUM NALU

Daru’s ongoing water and sewerage problems, which have crippled business for many years, are set to be a thing of the past when the K52 million Daru water and sewerage project funded by PNG Sustainable Development Program (PNGSDP) is completed next April, The National reports.

Under the water agreement signed in April this year, PNGSDP will provide funding of K52 million to improve water and sewerage systems while Water PNG, which owns the systems, will provide the technical support for the project.

Project signboard in Daru.-Nationalpic by MALUM NALU

The project will take 12 months to complete from signing of the agreement.

The problem came to a head in November 2010 when 13 people died and more than 60 were admitted to hospital following a cholera outbreak,

The island is currently over-populated with more than 20,000 people, including public servants, who depend entirely on water piped from the mainland.

A few people and institutions, though, depend on well water and rain water.

“The current Daru water supply system is old, has become unreliable and is no longer capable of supplying the needs of the increasing population,” according to the PNGSDP.

“As well, there is no reticulated sewerage system on the island, which poses serious health risks for the island’s population.

“The proposed development of a port at Daru and associated industrial development will impose added pressure on the existing infrastructure and services in the town.

“PNGSDP has approved K52 million to rehabilitate the existing water supply and to build a reticulated sewerage system.”

Meanwhile, a tertiary sewerage treatment facility will be constructed at Tawo’o Point to replace the current system involving dumping of raw sewerage into the sea at Tawo’o Point.

This facility is expected to cost around K20 million and expected to be completed by end of 2012.

PNGSDP: LNG plant a possibility in Daru

By MALUM NALU

The PNG Sustainable Development Program has ambitious plans for the proposed Daru international deep sea port, including the development of an LNG plant, The National reports.

This is with the likelihood that Western province could soon become the next frontier of PNG LNG project expansion following on from the Southern Highlands.

Western is already becoming a multi-million dollar oil and gas exploration ground for companies such as New Guinea Energy, Talisman Energy Inc, Mitsubishi Corporation, Esso PNG Exploration Ltd and Oil Search.

The proposed Daru international port  could also support the creation of an industrial hub at nearby Oriomo, be the point of export for Ok Tedi mine with mine life now extended to 2024, and be the port for the proposed Purari hydroelectric project in neighbouring Gulf province.

The project got off to a start  last Friday with a groundbreaking ceremony at Tawo’o Point in Daru by PNGSDP CEO, David Sode, for the first stage of the project at a cost of K15 million.

Sode (left) speaking at the launching of the first stage of the proposed Daru international deep sea port at Tawo’o Point last Friday.-Nationalpic by MALUM NALU

According to a PNGSDP information paper, it had been developing the Daru Port project over a number of years.

“Having undertaken considerable work to de-risk the project, PNGSDP is now seeking a partner(s) for the construction and operation of the port,” it said.

“The Daru port project represents a considerable investment by PNGSDP in the transformation of the Western province economy and is expected to be a commercial business in its own right.

“The port will enable the creation of an industrial hub at Oriomo and support the development of an LNG plant at Daru.”

The paper said PNGSDP first began work on the Daru Port concept in December 2005.

“In 2008, tenders were called for a port design that included 78ha of reclaimed land and approximately 400m of quay face,” it said,

Because of various factors, PNGSDP decided that the project should be placed on hold until after the Ok Tedi Mining Ltd (OTML) mine life extension (MLE) feasibility study was completed.

“In 2010, PNGSDP decided to invest US$14 million in geotechnical surveying and analysis that would resolve some of the uncertainties that had been revealed in the previous tendering,” the paper said.

“This surveying programme is nearing completion and, together with ongoing discussions with potential customers, has informed a new master plan for the port.”

Objectives of the geotechnical survey include:

·         Establishing the level of dredging required for deep water access to the port;

·         Establishing the availability of material that can be used for land reclamation, collecting data for sedimentation and current modeling;

·         Collecting data that can inform the port’s structural design and identifying fresh water sources on Daru Island; and

·         Identifying a source of quarryable rock close to Daru.

Daru to get new K10 million wharf

By MALUM NALU

Daru will have a new K10 million wharf trestle in August this year, The National reports.

This follows the launching of the project last Friday by PNG Sustainable Development Program (PNGSDP), effectively giving the green lights to contractor Curtain Brothers to start work.

Curtain Brothers’ employees start work on the Daru wharf trestle last Friday.-Nationalpic by MALUM NALU

The project signboard was unveiled by Western province Governor Dr Bob Danaya and South Fly MP Tony Subam

“The existing Daru wharf was condemned two years ago as the trestle had deteriorated to an extent that it was unsafe to use,” said PNGSDP chief executive officer David Sode.

“This affected movement of cargoes in and out of Daru significantly, with the flow-on effect on businesses, costs and reliability of coastal shipping.

“PNGSDP is providing K10.2 million for the reconstruction of the trestle.

“A contract has been awarded to Curtain Brothers to undertake the rehabilitation work.

“The wharf will be available for regular use by year end.”

Curtain Brothers project manager Tony King assured everyone that the project would be completed by August.

“The trestle wharf is being completely demolished,” he said.

“You’re going to get a brand-new trestle wharf.”

“We expect the project to be completed by August.

“We look forward to having the job completed on time.”